Economy enduring 'uncertainty, doubt': Solbes

5th September 2007, Comments 0 comments

5 September 2007, MADRID - The recent wave of US mortgage defaults rocked global financial markets because it caused uncertainty, and not because it created a problem of liquidity, Spanish Economy Minister Pedro Solbes said on Wednesday.

5 September 2007

MADRID - The recent wave of US mortgage defaults rocked global financial markets because it caused uncertainty, and not because it created a problem of liquidity, Spanish Economy Minister Pedro Solbes said on Wednesday.

"I think we have a situation of uncertainty and doubt, which is bad for the economy," the former European Union Economic and Monetary Affairs Commissioner told private radio Cadena Ser.

"What emerged was not so much a problem of solvency or liquidity, because people have money, but one of uncertainty and a lack of confidence," he added.

The outlook for the global economy was now more gloomy than two months ago because "we have much more uncertainty now," he said.

Earlier this week Solbes' successor as EU Economic and Monetary Affairs Commissioner, Joaquin Almunia, said the fallout from the US subprime lending crisis on European growth would be limited.

Widespread defaults on US subprime home loans -- or money lent to people with patchy credit histories -- have raised fears that the flow of credit will dry up in world markets as investors scramble to contain losses.

The European Central Bank, the US Federal Reserve and other central banks have injected billions into money markets worldwide in an effort to boost liquidity.

[Copyright AFP with Expatica]

Subject: Spanish news

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